Income for Life Trading: Answering Your Questions

On Wednesday, 1,000 of our most loyal customers joined us for a live event. We filled every seat and had record attendance.
Andy Crowder and I were thrilled with the turnout for our monthly investment training event: Income for Life: Grow and Protect Your Wealth with 3 Simple Strategies. I hope you were able to accept our invitation and join the live event.
During this live event, we revealed three simple strategies for collecting extra income. These are in fact the building blocks of the Income for Life Plan.
We took many customer questions in our live question and answer session. Unfortunately, we didn’t have time to respond to every question.
So I’ll take a minute to answer a few more subscriber questions.
Claudia asked, “On the covered calls, how do you select the stocks?”
It all starts with highly liquid stocks like Altria Group (NYSE: MO) or General Electric (NYSE: GE). The strategy works equally well with exchange-traded funds (ETFs) including the SPDR S&P 500 ETF (NYSEArca: SPY). You’d need to own at least 100 shares of the stock, since one options contract represents 100 shares.
When selecting an underlying position, we like to focus on stocks with low volatility or beta. We want stable stocks that don’t rise or fall too much.
Why? Because ideally we don’t want our shares to be “called away.” Instead, we’d rather keep our stock, and sell calls every two to three months.
Charles called in to say, “I have been selling calls for 4 ½ years. Right up until now, I was successful, with a 27% return as of last year. But this month it’s been very difficult to get calls of any value. Can you still sell covered calls and be successful in this atmosphere?”
Charles – that’s a great question. It’s awesome to hear about that you’ve been earning a 27% annual return using that strategy.
Covered calls are a great strategy to use, even when the market is volatile. After all, you should only be using this strategy on stocks that you want to own for the long term. When the market is more volatile, it actually increases the amount of premium – or income – you can earn from selling calls. So in many ways, the current environment is even better than it was a few months ago.
In fact, my colleague Andy Crowder says that right now is the best time in the last six years to use this strategy. If you want to see how we’re using this strategy to capture solid gains in this current market, just click here now.
Another customer named Leon called in to ask, “My brokerage firm won’t allow me to sell puts. But I’m able to use covered calls. Why would that be?”
Leon – every brokerage firm is different. I think you should call your firm’s customer care center. They’ll be able to quickly help resolve this issue.
If I had to guess, I’d say that it has to do with account margin requirements. To use covered calls, you don’t need to have an account approved for margin. However, when selling puts you do need to have a margin account (even if you never use the margin that’s available). Additionally, firms have different documents that need to be completed in order to approve various levels of options trading.
Joe – and many others – wanted to know more about the cost of trading.  He asked, “What are the commissions for trading options?”
Good question regarding fees. Obviously, every brokerage firm is different. TD Ameritrade is one of the biggest brokers focused on options. It charges $9.75 per transaction plus $0.75 per options contract. If you’re trading 10 options contracts per security, it costs you $17.25 per transaction.
The best-known brokerage firms for options include TD Ameritrade, optionsXpress and OptionsHouse.
It’s worth considering pressuring your brokerage firm for a discounted commission rate. The online brokerage business is competitive, and these firms are often willing to give a deal to keep a customer satisfied. Just ask for a better price, and you’ll likely save some real money.
Larry asked, “On covered calls, how many months out do you typically go?”
Our preferred duration is 60-90 days. This allows us to write calls on a stock four to six times per year. This way we’re generating consistent income throughout the year, from the same exact stock. Plus, by using duration of 60-90 days, we can dramatically reduce the likelihood that our shares will be called away.
Now, you may have missed yesterday’s live investment training event. But that doesn’t mean you need to miss out on this opportunity. You can still get immediate access to Income for Life.
In fact, you can get complete access and learn how to create your own income for life plan. When you accept my no-risk invitation, you can claim immediate access to four special bonus reports, three training videos, the latest issue and trade alerts.
Just click here now to start creating your own income for life. I look forward to working with you.